Canadian Arctic in a fog

The Canadian government is spreading confusion in the Northwest Territories over the impact of its temporary freeze on oil and natural gas exploration in the Canadian section of the Beaufort Sea.

The only definitive statement so far has come in an online statement from the Indigenous and Northern Affairs Department that extensions will not be granted for permits carrying C$1.9 billion of work commitments that are due to expire over the next six years.

But the department said that the Arctic license holders are free to keep asking for extensions to permits that expire in the 2019-23 period.

“Should stakeholders raise license extension issues during the consultations, the government of Canada will take their feedback into account to inform the next steps,” the department said in a vaguely worded statement that Indigenous and Northern Affairs Minister Carolyn Bennett declined to explain in more detail.

Paul Barnes, Atlantic Canada and Arctic manager for the Canadian Association of Petroleum Producers, told Bloomberg News that his lobby group understands the government will hold discussions, in particular with license holders, “with respect to (permit) extensions. We’re anxious to have those discussions.”

For now, the only hope for license holders - notably a partnership of ExxonMobil, Imperial Oil and BP - is that the government may be open to a review of the five-year ban on drilling that it imposed late last year after it completes a current round of consultations on the impact of the freeze.

The other proponents are ConocoPhillips, Chevron, Repsol and Franklin Petroleum Canada.

It is not yet clear whether the Exxon-Imperial-BP consortium will continue probing ways to improve its drilling and spill-response measures in hopes that exploration will be possible should a more pro-industry government get elected.

Otherwise the partnership has made no changes to its mid-2015 decision to suspend its Beaufort exploration program, citing insufficient time to begin test drilling before its lease expires in 2020.

BP said it will “work to understand any potential implications (of the drilling freeze) on our business.”

A spokesman for Franklin said that if exploration work is halted, the issue could result in legal action.

Greenpeace is among several environmental groups that have been pressing for even stricter limits on petroleum activities in the Canadian Arctic, arguing that the government is still short of meeting its pledges to lower carbon emissions.

It said all oil and gas operations in the region should be halted until “rigorous” tests are imposed to determine whether the projects make sense in the “low-carbon world” agreed to in last year’s Paris climate accord.

- GARY PARK